The mortgage industry is a document-centric business; you can’t get around it. If they don’t have the right documents, financial institutions can’t sell loans into the secondary market. This is an exciting time, because that no longer means that documents have to be printed on paper. So in working toward that new electronic workflow, business should be no longer driven by the documents themselves, but rather the data contained in them.
Getting to data-driven documents
Initially, lenders created digital versions of the original paper documents lenders as they moved to adopt electronic documents. This was a great first step, but forced consumers to deal with static forms that are difficult to modify and caused time delays waiting on changes to be enacted. Data-driven documents, have dynamic data points that hold the required data for each individual loan.
Migrating towards driving your processes with data instead of documents, you can enjoy a number of benefits almost immediately! Among which include: higher customer satisfaction, user efficiencies, compliant operations, and with the right doc prep system, workflow advantages.
In this post, we’ll show how this can work for you so you can achieve all those benefits.
For borrowers, documents are the experience
Mortgage loan borrowers don’t process their own loan applications. They don’t spend time understanding the differences in a menu of loan choices. They often don’t even make the final choice of the loan they buy. Instead, they depend on the expertise of their trusted loan officer. What the borrower does contribute to this process, is to provide old financial documents and sign new ones. So if the documents are the borrower experience, this is your golden ticket to improving their experience.
When the lender drives the mortgage lending process with data, they control the borrower experience. The lender does this by ensuring that the documents being presented to the borrower aren’t excessive or redundant and will equate to a fully compliant loan.
Doing this, the lender can ensure that the borrowers only have to sign once on the correct set of documents. Making the borrower come into the office to sign again because incorrect documents were sent can affect the level of trust in their lender. Avoiding this scenario, the borrower enhances the trust they have in their loan officer, and their overall satisfaction improves.
For lenders, documents are the product
The end of the lending process, if all goes well, provides the lender with an asset that can be sold into the secondary market. That asset is for all intents and purposes, a stack of documents.
When the invalid or incorrect documents are included in this stack, they get that loan back, new documents have to be generated, borrowers are called back, and the overall process has to be redone to correct for these errors. This is at great expense to the lender and at great expense to the borrower’s satisfaction level.
When the lender has worked to ensure system data integrity by training loan officers, applying internal reviews, building checks into their LOS, defining business rules with their doc prep system, and utilizes data to drive their documents, the information on the documents will always be correct.
Over the past 25 years, we’ve built data validation tools into our platform that lenders can use for this purpose. Correct data in the system equates to documents that can’t be wrong. All the benefits the lender receives then travel downstream into post close.
Subsequently, the documents that go to the servicer will be generated using the same ‘good’ data set as the originally closed loan. Hence, any new investor that buys the loan will have the correct data and documentation. Their benefits include smoother post close processes, fewer expensive corrections, and mitigation of the audit risk that can cost lenders dearly.
For the government, data is the deal
Next year, the government will change the rules regarding its UCD file, requiring the lender to provide information about the specific documents the lenders delivered to the consumer. This is a direct result of too many inconsistencies between the data Fannie and Freddie have been receiving and the documentation that came out of the closing.
This is an impactful illustration of the industry catching up with our data-centric model for document preparation. For lenders who are already leading their process with data, the UCD becomes a redundancy layer. For lenders who are leading with documents rather than data, it will quickly become a stark wake up call to transition to a document preparation provider that can eliminate inconsistencies by driving loan processes with data.